Agriculture

Agriculture Industry Market Research Reports, Analysis & Trends

Agriculture industry comprises companies that operate by cultivation of soil, plants, forests, livestock and crops. The history of agriculture dates back many years and has been defined by varying climates, cultures and technologies. The United States Department of Agriculture offers many programs and services which include grants and loans, disaster assistance and insurance programs. Agriculture industry is highly influential and promoter in terms of nutrition, clean and organic consumption, and the dept. of agriculture has offered other important programs and services including, food security, importing of goods, exporting of goods, and education and research. In addition, many topics are addressed such as animal health, biotechnology, energy, environment and natural resources, food safety, homeland security, plant health and rural and community development.

According to Freedonia, Worldwide demand for agricultural equipment is expected to grow at close to 5% per year starting 2014 to reach $123 billion. Market growth is expected to be fueled by mechanization of emerging market agricultural industries, and the expansion is expected to be particularly strong in developing nations, and major growing countries such as India and China due to economic growth, large populations and growing food consumption. Government investment in agriculture mechanization to improve crops will aid market growth. Most of the world’s top agricultural equipment manufacturers are headquartered in developed nations. China outpaced the US in 2009 as the world’s number-one supplier, making $17 billion worth of shipments.

Agriculture Industry Current Trends

World agricultural production is expected to grow nearly 1.5% yearly in the next few years, according to the Organization for Economic Co-operation and Development (OECD). There is expected to be little change in livestock production, with per-capita set to rise more than 0.5% every year, and there are many challenges facing the agricultural industry in today's scenario which include limited arable land, climate conditions and the increasing expense of materials such as fertilizers and equipment. There is 1.5 billion hectares of arable land in the world, which is worth around $5 trillion.

Rising global population is putting increased pressure on the agriculture industry to meet food demand. Important developments in fertilizers, chemicals and seeds have been key in helping the sector rise to the challenge. With the world population set to grow by 1.2 billion before the end of the decade, and daily caloric intake growing by over 500 calories a day over the past few decades, food consumption continues to climb and farmers are increasingly reliant on technology and mechanization to speed up output. By 2050, there is expected to be 3 billion more people to feed, by which time meat production demand will grow almost 75% and cereal production will have to increase by 1 billion tons.

Agriculture Major Industry Players

The United States, China, India and Russia are the major leaders for cereal and vegetable crops.Some of the major industry players in agriculture are Adler Seeds, Agrium, BASF, Alberta Wheat Pool, Danisco, Bernard Mathews Farms, Falegh Sanat, Golden State Foods, Heritage Foods, and Archer Daniels Midland.

China's weight in the global agricultural sector is swelling, as the country has a growing impact on international production balances and prices. China will maintain a strong appetite for key commodities for the foreseeable future and we see particular potential for production growth in sugar, dairy and meat products. High demand growth, strong government support and potential for investment and consolidation in these industries will help them outperform in the coming years.

Over the longer term, we believe that the continued investment by the government to improve infrastructure - such as the improvement of irrigation systems - will help the country to turn away from its backward agrarian system and will yield results in terms of better-quality grains. We are especially upbeat in our outlook for grains and sugar production.

Our outlook for the Italian agribusiness sector has turned more positive, as we believe the dairy and livestock industries will record fairly robust growth through to 2018/19 on the back of the removal of the EU's milk production quota in 2015, and the opportunity for Italy to develop its value-added exports We expect corn production to post the strongest growth out of the grains complex, largely due to base effects, as we believe wheat output will remain broadly flat due to little opportunity for area or yield growth.

The 2014/15 cocoa harvest looks set to suffer from erratic weather conditions and outbreaks of disease, preventing farmers from capitalising on high prices. Slumping earnings from oil should reinforce the government's determination to rebuild the segment into an export powerhouse, but may test its capacity to finance ongoing regeneration schemes.

Egypt is the world's largest wheat importer and will benefit from the recent sell-off in grain prices. The country is in the process of reforming its food subsidy programme in an effort to make the process more efficient. We believe that particularly good growth prospects exist in the country's livestock and dairy industries, as cattle herds continue to recover from a foot and mouth outbreak in 2012. These sectors will also benefit from lower global grain prices relative to the last several years, and an improving domestic economic situation.

We hold a positive view on the Philippines' agribusiness sector in the long term, given the potential for expansion into new sectors such as palm oil. Our outlook is especially positive for sugar production, and we also believe the livestock sector will continue to post healthy growth rates. The Philippines' vast consumption market, along with strong government support, will foster domestic and foreign investment and favour output expansion.

With wheat and dairy production falling consistently short of consumption, Algeria is a major importer of food products. However, the government's new emphasis on improving food self-sufficiency is helping the grains and dairy sectors to rebound. Increases in government support will be positive for productivity and product quality in the medium term.

All agricultural markets will be negatively affected by recent Russian military intervention and poor macroeconomic fundamentals in Ukraine. There will be limited investment into the country over the coming quarters given the unstable situation, which will affect agricultural production over our forecast period. Particularly for the dairy and livestock industry, Russia's ban on imports from Ukraine will negatively weigh on production as Russia represents one of Ukraine's largest agricultural export markets.

While we hold a positive view on the South African agricultural sector and see particular growth in the livestock sector, we are less optimistic on sustained growth in cereals production. This will be due to slower yield growth owing to lower input usage from a weaker currency and limited development in GMO seed plantings. The sugar sector also presents interesting growth opportunities, mainly thanks to renewed investment and improved technologies.

We favour the sugar sector in Turkey because of the strong growth potential of the country's confectionery industry and our belief that large changes to the country's sugar production quotas are likely to occur in the coming years. We see upside potential in the livestock sector, as the government's supply of discounted credit has aided growth in recent years. We see some growth potential for the grain, dairy and rice sectors and production in these sectors will recover in 2015/16 following drought in 2014.

We see potential for output growth in corn and coffee, two of the main crops in Uganda. For coffee, we see Uganda as an East African leader in terms of exports, largely owing to government support for the sector, particularly new disease-resistant trees. Moreover, coffee prices are higher year-on-year, meaning farmers will be able to invest in their crops.

We hold a positive view on India's agribusiness sector, as the country will remain an agricultural powerhouse and is likely to maintain high levels of self-sufficiency for major food crops. Production growth of various commodities will be driven by strong government support and robust demand for manufactured foodstuffs. We see significant growth opportunities in sub-sectors such as dairy, coffee and livestock.

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